DivGro Pulse: November 2016

I consider stocks trading below the 50% mark potentially to be undervalued.

Another way to look at a stock’s recent performance is to plot current yield relative to the 52-week yield range. For consistent dividend payments, a stock’s yield rises when the stock price drops, and vice versa. Dividend growth investors often look at current yield relative to average yield over a time frame. A higher current yield suggests that a stock may be undervalued.

Because of the inverse price-yield relationship, the chart essentially reverses the order of the stocks. It is not an exact reversal, though. The reason is many stocks have experienced dividend increases over the past year.

Finally, I compare recent returns to annualized returns over a longer time frame. Doing so allows me to get a sense of each stock’s recent performance. The following chart compares 1-year returns to annualized 5-year returns for all DivGro stocks. Note that dividends are not accounted for in this chart:

Gilead Sciences, Inc. (NASDAQ:GILD) is the worst performer of all the stocks in my DivGro portfolio. In contrast, BHP Billiton plc (ADR) (NYSE:BBL), QUALCOMM, Inc. (NASDAQ:QCOM), and Cummins Inc. (NYSE:CMI) have performed quite well over the last year.

Positions To Close

My plans to sell the following stocks have not changed. I’m including 8-year F.A.S.T. Graphs showing the stock price correlated with each stock’s Adjusted (Operating) Earnings Growth Rate. In each case, the projected growth rates are negative.

– BHP Billiton plc (ADR) (NYSE:BBL)

Since my last pulse article, BBL has improved from an annualized loss of 11% to an annualized loss of 8%. BHP Billiton plc (ADR) (NYSE:BBL) is rated 2-stars and ranked #47 out of 48 stocks. The company has cut the dividend twice in the past year, so BHP Billiton plc (ADR) (NYSE:BBL) now yields only 1.75%. I’m planning to sell BBL by year’s end and to offset some 2016 capital gains.